What Makes A Loan Good Value

What Makes a​ Loan Good Value?
Ultimately,​ when we decide to​ take out a​ loan,​ we want to​ try to​ ensure that the​ loan we agree to​ represents the​ best value.
Too often,​ many of​ us simply look at​ the​ APR as​ the​ determining factor and people have often been lured into the​ dangerous mindset of​ believing that if​ a​ lender’s APR is​ the​ lowest around,​ then it​ must offer good value but,​ sadly,​ that isn’t necessarily the​ case .​
The APR rate can initially be a​ good guide to​ begin your research but there are many other important factors to​ also take into equal consideration .​
What about fluctuations in​ the​ Bank of​ England’s interest rate? If you​ have a​ loan with a​ variable APR and interest rates rise,​ then so,​ too,​ will the​ cost of​ your loan repayments over another loan which has a​ fixed rate of​ interest for the​ duration of​ the​ loan term,​ even if​ the​ latter had a​ lower APR when you​ were considering your choices .​
What about additional or​ ‘hidden’ charges? Some loans may look very attractive and represent the​ best value but have you​ made sure you​ haven’t overlooked any additional costs you​ might incur? These can include payment protection insurance,​ arrangement fees and other charges such as​ an​ early resettlement fee .​
Then there’s the​ APR itself .​
You might have seen a​ lender offering a​ loan with a​ ‘typical’ APR rate of​ 7.9%,​ for example .​
Sounds good on​ paper but do you​ definitely qualify for that rate? Around a​ third of​ all loan applicants with any given choice of​ lender will not qualify for the​ typical rate and so may end up paying far more than if​ they’d opted to​ take out a​ loan with a​ lender with a​ slightly higher APR but one which they did qualify for.
When trying to​ work out which loan represents the​ best value,​ the​ important thing to​ consider is​ to​ ask yourself all of​ the​ above questions and build up an​ accurate picture of​ the​ TOTAL amount you’d have to​ repay from the​ start date to​ the​ completion date of​ the​ loan .​
Only by tallying up all of​ these figures from each of​ the​ lenders can you​ truly determine which loan represents the​ best value.

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